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The Legal Ethics Forum blog has a post on a recent Massachusetts appeals court decision that reversed a trial court's dismissal of an unlawful termination claim. The plaintiff is an attorney who discovered child pornography on the computer of one of his firm's important clients. He notified his firm, which instructed him to hire a specialist to erase the pornography from the computer. He refused, stating that they couldn't destroy evidence of a crime and he ultimately notified the FBI. He was--surprise--fired for his trouble. The appellate court held, contrary to the trial court, that revealing the child pornography didn't threaten any protected privileged or confidential information. Hard to believe that it took a reversed trial decision to get to that point.

In celebration of the workers' rights version of May Day, and at least not inconsistent with the pagan version, I'd like to highlight my favorite protest so far of the year: the bearded protest of L'Oreal in Paris. The protestors leveled charges that the company did not have enough women managers despite producing products used primarily by women. Additionally, only three of the fourteen board members of the company are women. The company does not have a great track record when it comes to discrimination. It was convicted of racial discrimination (in France this is a crime) in 2007. From the Agence France Presse

Mimicking L'Oreal's famous advertising slogan, activists handed out a
leaflet entitled "Because you're worth it" and held up placards with
photos of company directors all with beards scrawled on their faces,
including the women.

The protest took place about two weeks ago, and the protesters themselves also wore beards. Protests today in Europe have had particularly large turnouts and some violence, due at least in part to the current economic situation.

We've posted quite a bit about challenges to decisions issued by the two-member NLRB (see, for instance, here, here, and here) and now the near-final verdict is in: the decisions are struck down. In the Laurel Baye decision issued today, the D.C. Circuit held that the two-member NLRB did not have authority to issue decisions. The key issue in the case was whether the Board correctly interpreted Section 3(b) of the NLRA as permitting two-members decisions. Section 3(b) states that:

The Board is authorized to delegate to any group of three or more members any or all of the powers which it may itself exercise. . . . A vacancy in the Board shall not impair the right of the remaining members to exercise all of the powers of the Board, and three members of the Board shall, at all times, constitute a quorum of the Board, except that two members shall constitute a quorum of any group designated pursuant to the first sentence hereof.

According to the court, the Board's interpretation of this provision was improper:

[T]he Board’s position ignores the requirement that the Board quorum requirement must be satisfied “at all times.” Moreover, it ignores the fact that the Board and delegee group quorum requirements are not mutually exclusive. The delegee group quorum provision’s language does not eliminate the requirement that a quorum of the Board is three members. Rather, it states only that the quorum of any three-member delegee group shall be two. The use of the word “except” is therefore present in the statute only to indicate that the delegee group’s ability to act is measured by a different numerical value. The Board quorum requirement therefore must still be satisfied, regardless of whether the Board’s authority is delegated to a group of its members.

Reading the two quorum provisions harmoniously, the result is clear: a three-member Board may delegate its powers to a three-member group, and this delegee group may act with twomembers so long as the Board quorum requirement is, “at all times,” satisfied. But the Board cannot by delegating its authority circumvent the statutory Board quorum requirement, because this requirement must always be satisfied.

Indeed, if Congress intended a two-member Board to be able to act as if it had a quorum, the existing statutory language would be an unlikely way to express that intention. The quorumprovision clearly requires that a quorum of the Board is, “at all times,” three members. A modifyingphrase as unambiguous as this denotes that there is no instance in which this Board quorum requirement may be disregarded. . . .

Congress provided that a quorum of the Board is three members. The Board does not have three members. It cannot act. Though section 3(b) gives the Board power to delegate its authority to a group of members, this authority is necessarily limited by the fact that the delegation authorityallows the Board to grant its power only to a group of three or more members. The Board’sdelegation power is also obviously limited by the fact that the Board quorum provision establishes that the power of the Board to act exists when the Board consists of three members.Thedelegee group’s delegated power to act, however, ceases when the Board’s membership dips below the Board quorum of three members. It therefore follows that where, as here, a delegee group acts on behalf of the Board, the Board quorum requirement still must be satisfied.

As I've said before, I agree with this interpretation of Section 3(b), although thought the Board had a reasonable position and an admirable goal of keeping the agency doing what it's supposed to do (and hats off again to Members Liebman and Schaumber for all their hard work during this time). More important, however, is that this decision will impose a significant cost on the Board and the victims of unfair labor practices in all the affected cases--as they'll now have to wait a lot longer to have their cases heard again. To its credit, the D.C. Circuit addressed this reality in its closing:

Finally, we acknowledge that the case before us presents a close question, and that neither OLC’s interpretation nor the Board’s desire to continue to function is entirely indefensible. Both were undoubtedly born of a desire to avoid the inconvenient result of having the Board’s adjudicatory wheels grind to a halt. Nevertheless, we may not convolute a statutory scheme to avoid an inconvenient result. Our function as a court is to interpret the statutory scheme as it exists, not as we wish it to be. Any change to the statutory structure must come from the Congress, not the courts. Perhaps a properly constituted Board, or the Congress itself, may also minimize the dislocations engendered by our decision by ratifying or otherwise reinstating the rump panel’s previous decisions, including the case before us. See, e.g., FEC v. Legi- Tech, Inc., 75 F.3d 704 (D.C. Cir. 1996) (affirming properly reconstituted FEC Board’s ratification remedy for its unconstitutional membership).

Perhaps a small silver lining for the Board in this case is that Congress and the Obama Administration will try to move more quickly to get the Board back up to its full complement of members.

UPDATE:

Finally, in a late-breaking twist, I've just found out (thanks to Peter Winkler, Dennis Walsh, and Patrick Kavanagh) that the NLRB actually won on the exact same issue today in the Seventh Circuit. The court's analysis in New Process Steel isn't as thorough as the D.C. Circuit's, although much more so than the First Circuit's, which earlier upheld the two-member decisions. In New Process Steel, the Seventh Circuit held that the decisions were valid, stating (among other things) that the Board's reading of Section 3(b):

indeed is the plain meaning of the text. As we read it, § 3(b) accomplished two things: first, it gave the Board the power to delegate its authority to a group of three members, and second, it allowed the Board to continue to conduct business with a quorum of three members but expressly provides that two members of the Board constitutes a quorum where the Board has delegated its authority to a group of three members. The plain meaning of the statute thus supports the NLRB’s delegation procedure.

Thus far--and the way today is going, who knows what other court will weigh in--the count is now 2-1 in favor of the NLRB's current two-members decisions. Unfortunately for the Board, the votes aren't weighted equally. Not only does the D.C. Circuit have jurisdiction over every potential NLRB case (so any party that wanted to challenge a two-member decision can race to file there), its holding generally garners far more respect than those of other circuits.

I don't know how the Board will decide to proceed until it gets more members; it could apply its non-acquiescence rule and continue to plow ahead or it can sit back and wait a bit until it can be sure that what it does won't be struck down because of this issue. I imagine the Board itself doesn't know at this point, so we'll have to wait and see. You can also see the AP story that quotes the NLRB's press release on Laurel Baye.

Thanks to Carol Furnish (NKU-Chase) for sending word of a fantastic (but grim) new tool from Google. If you do a regular Google search on "unemployment rate" followed by a U.S. state or county, you get an unemployment rate chart. What's really great is that you can overlay multiple charts. So, for example, I can see at a glance that my metropolitan area (Cincinnati, centered in Hamilton County) has an unemployment rate that is about a point under the national average, and that the unemployment rate for Ohio as a whole is about a point higher than the U.S. average.

The tool also works for tracking population trends: substitute "population" for "unemployment rate". For further explanation of the tools, see Google's Adding Search Power to Public Data.

Despite the back and forth recent days over Chrysler filing for bankruptcy, it now appears that it's going to happen. Apparently, a couple of creditor hedge funds are responsible (where have we heard that before), as they refused to sign off on the deal that all other interested parties had agreed to. Now those hedge funds look like they'll be able to see if they're right that they can get more in bankruptcy. There are indications that Chrysler may not look significantly different in bankruptcy as it would have under the proposed deal, but that remains to be seen.

An
exploration of the most recent decision of the U.S. Court of Appeals
for the Ninth Circuit in Golden Gate Restaurant Association v. City and
County of San Francisco (Golden Gate III) indicates that ERISA Section
514(a) preempts the San Francisco Health Care Security Ordinance. Two
premises guide this exploration of Golden Gate III. First, employers’
ongoing payments to health care administrators, such as insurance
companies, constitute employee benefit “plans” for ERISA purposes.
Second, employers’ contributions are central features of their employee
plans. This first premise indicates that a San Francisco
employer which regularly contributes to San Francisco pursuant to that
City’s health ordinance thereby creates a “plan” for ERISA purposes.
The ERISA status of this plan purchasing municipally-administered
medical services is the same as the ERISA status of an analogous
employer-financed plan paying a private administrator for comparable
health care: As to all of these plans, ERISA Section 514(a) preempts
state and local regulation. Moreover, it is not
persuasive for purposes of ERISA Section 514 to say (as does the Ninth
Circuit) that San Francisco, by its health care ordinance, regulates
employers’ health care contributions, but not employers’ health care
plans. Contributions are central features of employers’ health care
plans for their employees. By regulating employers’ contributions, San
Francisco regulates employers’ plans.

Hat tip to Mitch Rubinstein at Adjunct Prof Blog for pointing out that the New York State Assembly has passed the Gender Expression Non-Discrimination Act, which would ban discrimination on the basis of transgender in housing, employment, credit, and public accommodations. Here's a descriptive press release. The bill is pending in the state senate.

The New York Times has an article examining whether the possible government bailouts of the U.S. automakers will strengthen the UAW. Given all of the cuts that UAW workers are facing, the question itself seems odd at first glance. However, the article makes the case for a UAW upswing:

In the devastating slump that has forced two of Detroit’s automakers to the brink of bankruptcy, the United Automobile Workers union stands to become one of the industry’s few winners.

According to restructuring plans proposed this week, the union will have more than half the stock in Chrysler and a third of General Motors, meaning it will have tremendous influence, with the government, in determining the future of the companies. The United Automobile Workers union said Wednesday that its members
ratified a cost-cutting deal with Chrysler by a 4-to-1 margin. . . .

The U.A.W. members at both automakers stand to lose some of their
pay and benefits, but the cuts are not as deep as those faced by
airline and steel workers when their companies went bankrupt. Under
proposed deals devised by the Treasury Department, U.A.W. pensions and retiree health care benefits would largely be protected.

The U.A.W. has derived its leverage in part from the support of a
Democratic president and Congress. But it also results from a long-term
strategy to build support in Washington that stretches back more than
60 years. . . .

Mr. Gettelfinger, the current president, has also been an effective,
steel-nerved leader, and has managed to maintain the union’s importance
in recent negotiations, even though the U.A.W. has lost nearly 200,000
members since he took office in 2003. Mr. Gettelfinger’s influence stems in part from the fact that the
U.A.W. represents nearly all the auto workers at the Detroit companies.
(Workers at a few plants are represented by the I.U.E.) By contrast,
airline workers are represented by multiple unions.

The point about the UAW possessing additional power because it's the 800 pound gorilla for workers in the auto industry is an important one. However, I'm not sure that I'd call the UAW (or anyone save the foreign automakers) a "winner" in this situation. It may be true that the union comes through in OK shape, but it's going to lose a lot of members and those members are going to lose a lot of money and benefits. Any way you slice it, that's still not a good thing.

The American Law Institute has proposed a Restatement (Third) of Employment Law. In late 2008, concerned with the adequacy of the Restatement draft, the Labor Law Group formed working committees to examine each of the draft chapters. On February 7, 2009, those committees presented their findings at a conference sponsored by the LLG and U.C.-Hastings. Here is a summary of the committees' findings, written by LLG Chair Ken Dau-Schmidt:

Among the members of the working committees there was a strong consensus that the current drafts of the three chapters of the proposed Restatement are not ready for adoption. Several committee members expressed the view that the notion of a Restatement in this area as a whole needed a fundamental rethinking, with greater attention given to the underlying reasons for having a separate Restatement of employment law. It was persuasively argued that, without such a fundamental discussion in the proposed Restatement, it would be hard to make it consistent with the other ALI Restatements on contract and tort or to determine what the Restatement of employment law "should be" in choosing among competing precedents. Others argued that, even with a better theoretical foundation, the project of a Restatement of employment law was fundamentally flawed and could not be cured. Several committee members expressed the belief that employment law doctrine is too contentious and too much in flux at the current time for a useful comprehensive Restatement. These committee members worried that a premature Restatement, based on an inexact snapshot of the current law that is blind to historical roots and indifferent to the trajectory of change, will either be rendered irrelevant by economic and social change or else serve as an obstacle to the law's continued evolution to accommodate those changed conditions. Even among the committee members that were the most optimistic about the current draft there was a consensus that the proposed Restatement needed further work to promote (1) greater consistency within the Restatement; and (2) a more careful Restatement of existing case law. The reports of the working committees are replete with examples of how the current draft needs to be clarified and reworked. There was also broad agreement that, to build a consensus among employment law academics on what a Restatement of employment law should be, it would be useful to engage a broader array of perspectives than is represented among the current reporters.

Here are links to the committees' downloadable findings, as well as links to other articles/essays presented at the LLG/Hastings conference. Special thanks to Paul Secunda for uploading all of these onto SSRN.

The Supreme Court heard its last oral argument of the term today in Northwest Austin Municipal Utility District Number One v. Eric Holder, Jr, Attorney General, known to those who follow it as the "NAMUDNO" case. The case concerned Congress' extension in 2006 of Section 5 of the Voting Rights Act, which requires some jurisdictions to get advance approval (preclearance) of changes to election laws. The preclearance is designed to prevent discrimination in the ability to vote on the basis of race. What, you may ask, does this have to do with workplace law? A lot, as it turns out, if you happen to be a state employer or state employee.

The primary challenge to this Section 5 is that it exceeds Congress' power under that other Section 5--Section 5 of the Fourteenth Amendment. To be validly enacted under Section 5 of the 14th Amendment, a statute must be congruent and proportional to remedy a documented constitutional harm, as the Court held in City of Boerne v. Flores. The remedies of the Voting Rights Act were held to be valid enactments in their original incarnation in Katzenbach v. Morgan and South Carolina v. Katzenbach. However, because of the passage of time since most of the original constitutional violations, it's no longer as clear that the remedies which go beyond what the constitution itself would provide remain within Congress' powers. (I have written on the passage of time issue--here is a link to it on SSRN).

The way this issue impacts workplace law is that it relates to how Congress can subject states as employers to suits for money damages brought by injured employees--think Title VII in particular. The state is ordinarily immune from suits for damages brought by individuals either in federal court (11th amendment) or their own courts (state sovereign immunity). Congress can abrogate that immunity, but only under its Section 5 of the 14th Amendment powers. We had a series of cases right around the turn of the century at the Supreme Court and the lower federal courts holding that a number of federal statutory provisions couldn't be used by state employees to sue their employers.

If the Supreme Court holds that the extension of Section 5 of the Voting Rights Act is unconstitutional, look out for renewed litigation on the employment statutes, particularly the disparate impact provisions of Title VII, which are also under at least a veiled attack (by some amici) in Ricci v. DeStefano. According to SCOTUSblog, the Court seems evenly divided on this constitutional question with Kennedy being the swing vote. Rick Hasen (Loyola LA) at Election Law blog thinks that the Court will find this unconstitutional. We'll have to wait and see what the Court does.

The audio of the argument can be found here (in a historical move the Court released it early), and the transcript is here.

Union density has declined in the United States to historically low levels, especially in the private sector. While there are many causes, one important cause is the nature of the labor laws. Over the past three decades, numerous interpretations of the labor laws have made it increasingly difficult for unions to organize, and have bogged down the election process with crushing delays. Thus EFCA represents a crucial measure to turn the tide and enable unions to regain their rightful place in American workplaces and American society.

Arlen Specter has just announced that he will switch to the Democratic party. No doubt motivated by yet another conservative primary challenge, this switch has huge implications for labor and employment law. The first question is whether Specter will switch back to supporting EFCA [hat tip to a reader who sent a link suggesting that he won't]. Even if he doesn't, many other labor and employment bills could benefit from a Democratic filibuster-proof majority (which would exist if Franken is seated). Moreover, the federal bench could look significantly different, which has an obvious impact on litigation.

According to US Census statistics released in August 2008, the gap between men's and women's earnings changed by less than one percent from 2006 to 2007, narrowing slightly from 76.9 to 77.8 percent. Median earnings for women of color are generally even lower. In 2007, the earnings for African American women were 68.7 percent of men's earnings; Asian American women's earnings were 89.5 percent of men's earnings, and Latinas earnings were 59 percent of men's.

Over a lifetime of work this loss adds up. On average, the families of working women lose out on $9,575 per year because of the earnings gap. Women may lose $434,000 in income, on average, due to the career wage gap. Women at all education levels lose significant amounts of income due to the career wage gap, but women with the most education lose the most in earnings. Women with a college degree or higher lose $713,000 over a 40-year period versus a $270,000 loss for women who did not finish high school. Women lose hundreds of thousands of dollars from the career wage gap no matter where they live.

Forty-six years after President John F. Kennedy signed the Equal Pay Act ensuring “equal pay for equal work,” women working full time earn on average 22% less than their male counterparts. This is a marked improvement over the 59 cents a woman was paid on the dollar in 1963, when the Equal Pay Act was passed. But it is clearly still too far from true economic and social equality. The Lilly Ledbetter Fair Pay Act, signed into law on January 23, 2009, ensures that victims of discrimination have fair access to the courts, but additional legislation is needed to close the persistent gap between men’s and women’s wages.

Despite a couple of recent posts on an imminent bankruptcy filing by Chrysler (see here and here), it's now appearing that the carmaker may be able to avoid bankruptcy. The proposed restructuring is quite interesting and poses some good labor law issues. According to the Washington Post:

The Treasury Department reached an agreement with Chrysler's creditors
late last night that might prevent the troubled automaker from going
into bankruptcy, sources familiar with the matter said today. The carmaker had owed a fractious group of 45 banks, hedge funds and
other firms about $6.9 billion. These creditors have agreed to write
down the debt to $2 billion. . . .

Chrysler also reached a deal over the weekend with the United Auto
Workers, in which the union would own a majority stake in the
automaker. A source familiar with the matter said if the restructuring of the
storied American automaker is completed according to the tentative
deal, the union would have a 55 percent stake in the company, the
Italian automaker Fiat would eventually hold a 35 percent stake, and
the government and Chrysler's lenders would share a 10 percent stake in
the company. The source spoke on condition of anonymity because he was
not authorized to comment publicly on the talks.

The agreement with the UAW, which must be ratified by union members,
and the deal with the automaker's lenders are milestones in the effort
to keep Chrysler and its 54,000 employees out of bankruptcy. . . . The agreement with the union essentially relieves Chrysler of a
portion of the $10 billion it owes to the union's retiree health fund.
In exchange for giving up its claims to some of that $10 billion, the
union is getting the significant equity stake in the company.

Gary Chaison, professor of industrial relations at Clark University
in Worcester, Mass., said that if the union winds up with a majority
stake in its employer, that "puts the UAW in a strange position." "If it takes company stock as a part owner in the company, it would
be bargaining against itself," he said. "It can never act as
adversarial in that relationship. Also it's in a position that to make
the company more stable, it has to reduce health-care benefits of its
own retirees."

As Chaison notes, the union's potential majority ownership raises some conflict of interest concerns. I wrote an article a while back on employee stock ownership plans with significant ownership stakes and the problems such plans may have under the NLRA (this was way back when employees actually wanted stock). The bottom line is that these issues are something that UAW needs to be careful about, but there are well-worn strategies that other employee-owned companies have used (e.g., United and its Board of Directors that was structured to prevent majority union control and put up a firewall around the companies labor-relations team) that can make everything lawful as far as labor law is concerned.

Because racial, religious or ethnic minorities have often suffered from discriminatory practices of governments and employers, many countries passed laws ensuring fair employment practices. While courts in the United States can order remedies such as one out of every three new hires needs to be a minority after finding an employer violated the law, what steps can an employer undertake to assist the advancement of minorities when it does not have a history of discriminatory practices? This issue arose in Ricci v. DeStephano, which the U.S. Supreme Court will review soon. It is a “reverse discrimination” suit filed by 17 whites and one Hispanic who took either the exam for Lieutenant or Captain and achieved scores qualifying them for promotion in the New Haven Fire Department. After seeing the results, the City cancelled the exams claiming both tests had a disparate impact on African-Americans and Hispanics as comparing their pass rates to the white rate violated a simple “rule of thumb” in the U.S. government’s guidelines. The City did not conduct any statistical tests, which are recommended in the guidelines when the sample sizes are small and also based its decision on the fact that no African-American applicant scored sufficiently high to be eligible for an immediately available promotion, although all promotions made for the following two years would be based on the exam results. The lower courts accepted the City’s interpretation of the data and granted summary judgment to the City. This paper studies the various criteria considered by the City and lower courts in assessing the data and demonstrates that over 50% of the time a fair non-discriminatory test for either position will fail the government’s “rule”. Furthermore, two fair tests will fail to satisfy the government’s rule and the City’s criterion that a member of each minority group receives at least one currently available promotion 12.9% of the time. These percentages are larger than the Type I errors, e.g. 05, adopted in virtually every discipline using statistical testing and used in previous cases, e.g. Castenada v. Partida, 430 U.S 483 (1977) and U.S. v. Hazelwood School Dist. 430 U.S. 299 (1977). The City’s approach would reject many fair job-related tests and require employers to incur the cost of validation studies. A formal statistical analysis shows that while the Lieutenant exam had a disparate impact, the differences in the pass rates of the three groups on the Captain exam were not close to statistical significance.

This is a very interesting explanation of the difficulties of determining whether an outcome is likely a product of chance when very low numbers are involved and an important caution to the EEOC's 4/5ths rule.

Thanks to Jerry Kalish (National Benefit Services & Retirement Plan Blog) for sending us a link to this map of the anticipated staggered recovery for the various U.S. metropolitan areas. Major Texas cities should return to pre-recession employment levels by the end of this year or next; most of California by 2012; New York and southern Michigan, not until 2015 or later. The map comes from yesterday's Chicago Sun Times. It's the perfect flip-side to the interactive map we described last week on Vanishng Employment.

The Associated Press is reporting that the Department of Labor will announce on Tuesday new rules limiting workers exposure to diacetyl, the artificial butter flavoring that causes "popcorn lung." Rick's post last week noted the recent litigation resulting from workers being harmed by diacetyl, but the previous DOL had not issued any regulations on the chemical.

There are no details yet, but they're expected tomorrow from Secretary Solis.

In an unpublished decision (only Westlaw link available), the Ninth Circuit has reversed the NLRB's Badlands Golf Course case--the Board split 3-2; you know the lineup. At issue was whether the employer bargained with the union for a reasonable period of time before withdrawing recognition, as required by Lee Lumber. As the NLRB dissent emphasized, the parties were seeking an initial contract, although they had been negotiating off and on for several years. The central question was whether the parties started bargaining "from scratch." The Board majority found that they had not started from scratch because of negotiations two years earlier--a finding that led the majority to discount the fact that the parties were negotiating an initial contract.

The court's holding was based a straightforward complaint about a lack of substantial evidence:

There is no evidence in the record concerning the nature or the substance of the earlier round of bargaining – what happened in any of the bargaining sessions, how the parties related to one another, or what progress, if any, was made.

It's odd to have a 3-2 NLRB decision flipped by an unpublished decision, but given that holding, it's not a big surprise. It's also a good reminder that the NLRB, like other agencies, have to be very careful about making sure that the record supports where the agency wants to go.

Workplace Fairness Blog has been nominated for Best Law Blog in the 13th Annual Webbies. Workplace Fairness "is a non-profit organization working to preserve and
promote employee rights. The site provides comprehensive information
about job rights and employment issues nationally and in all 50 states.
It is for workers, employers, advocates, policymakers, journalists, and
anyone else who wants to understand, protect, and strengthen workers'
rights."